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Chatter About Medicaid Block Grants Grows

A week after a published report suggested that the Trump administration might be working on a plan to introduce Medicaid block grants, the Washington Post reports that those efforts are under way in earnest.

According to the Post,

A small group of people within the Centers for Medicare and Medicaid Services is working on a plan to allow states to ask permission for their federal Medicaid dollars to be provided in a single lump sum instead of the way they are currently awarded as a percentage of states’ total costs.

While many, including members of Congress, insist that the administration cannot move forward with such a proposal without legislation, others suggest that the administration may offer states the opportunity to participate in Medicaid block grants voluntarily, by seeking a federal waiver.  What remains to be seen is whether the prospect of greater flexibility to shape their own Medicaid programs is sufficient to entice states to participate in an approach that almost certainly would result in less federal money for those programs.

NASH is concerned about the prospect of Medicaid block grants and their potential impact on private safety-net hospitals and addressed this issue in its 2019 advocacy agenda, writing that

If the policy focus shifts from participants to spending, an effort could be undertaken to attempt to introduce a major Medicaid change that has been much-discussed in the past: Medicaid block grants. Block grants, whether based on individual states’ Medicaid enrollment or on their past Medicaid spending, could impose unreasonable limits on Medicaid spending that could potentially leave private safety-net hospitals unreimbursed for care they provide to legitimately eligible individuals. NASH will work to ensure that any new approach that involves Medicaid block grant continues to give states the ability to pay safety-net hospitals adequately for the essential services they provide to the low-income residents of the communities in which those hospitals are located.

Learn more about what the administration is considering and how policy-makers, industry leaders, and others are reacting to the prospect of a push toward Medicaid block grants from the Washington Post story “The Health 202: The Trump administration is working on Medicaid block grants?

End Run Around Congress for Medicaid Block Grants?

The Trump administration reportedly is considering introducing Medicaid block grants through regulations rather than legislation, according to published reports.

Those reports explain that the administration may seek to offer states an opportunity to apply to the federal government to use Medicaid block grants by obtaining section 1115 Medicaid waivers, a commonly used tool for states seeking exemptions from federal legislative or regulatory requirements.

As reported by the online publication The Hill,

…the Trump administration is now considering issuing guidance to states encouraging them to apply for caps on federal Medicaid spending in exchange for additional flexibility on how they run the program, according to people familiar with the discussions.

Proposals to implement Medicaid block grants have arisen periodically over the past decade but have never gotten beyond the discussion stage because of how difficult it would probably be to gain congressional approval for such a program.  This latest proposal would seek to circumvent that problem by making Medicaid block grants optional for states and permitting those states interested in using them to apply for a Medicaid waiver from Centers for Medicaid & Medicaid Services to do so.

It is not clear whether such an approach would be legal.

NASH has long been skeptical about Medicaid block grants, concerned that the manner in which such block grants are implemented could impose artificial limits on state Medicaid spending that could be especially harmful during economic downturns when Medicaid enrollment typically rises and the demand for Medicaid-covered services falls especially heavily on private safety-net hospitals.  NASH’s advocacy agenda for 2019 addresses this very issue, explaining that

Block grants, whether based on individual states’ Medicaid enrollment or on their past Medicaid spending, could impose unreasonable limits on Medicaid spending that could potentially leave private safety-net hospitals unreimbursed for care they provide to legitimately eligible individuals. NASH will work to ensure that any new approach that involves Medicaid block grants continues to give states the ability to pay safety-net hospitals adequately for the essential services they provide to the low-income residents of the communities in which those hospitals are located.

Learn more about this latest proposal in The Hill article “Trump officials consider allowing Medicaid block grants for states.”

NASH Unveils 2019 Agenda

The National Alliance of Safety-Net Hospitals has unveiled its public policy advocacy agenda for 2019.

That agenda explains that NASH will:

  • Address Medicare issues such as continuing threats to private safety-net hospitals’ Medicare DSH payments, audits of the Medicare cost report’s S-10 form, graduate medical education payments, potential cuts in bad debt, 340B, the participation of private safety-net hospitals in value-based purchasing and alternative payment model programs, and the expected national conversation about “Medicare for all.”
  • Address Medicaid issues such as the adequacy of Medicaid DSH payments, possible reductions in Medicaid eligibility and benefits, the implications of a new proposal to define whether new immigrants and their families pose a threat of becoming “public charges,” the possible introduction of Medicaid block grants, and possible new restrictions on how states may finance their Medicaid programs.
  • Work to protect private safety-net hospitals from federal spending cuts.
  • Reintroduce itself to Congress and the administration.
  • Seek to enhance its ability to help shape government health care policy in Washington by recruiting more members.

For NASH’s complete 2019 advocacy agenda click here

Temporarily Gone But Not Forgotten

While last week’s withdrawal of the American Health Care Act at least temporarily halted talk of immediate repeal and replacement of the Affordable Care Act, at least one aspect of that proposed legislation, often discussed in the past, is sure to arise in the future as well:  replacing the current manner in which the federal government matches state Medicaid funding with Medicaid per capita limits or Medicaid block grants.

In a new issue brief, the Kaiser Family Foundation examines how a switch to per capita limits or block grants might affect low-income seniors served by both Medicare and Medicaid.  Among the issues the brief addresses are:

  • why such a switch would matter to low-income seniors at all
  • how it might change federal funding of Medicaid for low-income seniors
  • how states might react in ways that would affect low-income seniors
  • how it might affect the providers who serve low-income seniors
  • how such an approach might vary from state to state

Any move to Medicaid per capita limits or block grants could have serious implications for private safety-net hospitals and the communities they serve because these hospitals serve so many dually eligible Medicare/Medicaid patients.

Learn more about a possible change in how the federal government pays for its share of the Medicaid program that will surely find its way into future health policy discussions and debates in the Kaiser Family Foundation issue brief “What Could a Medicaid Per Capita Cap Mean for Low-Income People on Medicare?”

MACPAC Concerned About Prospect of Medicaid Block Grants

Members of the non-partisan legislative agency that advises Congress on Medicaid and CHIP issues expressed concern at their most recent meeting about the possibility of the federal government turning Medicaid into a block grant program.

At their meeting in Washington, D.C. last week, members of the Medicaid and CHIP Payment and Access Commission discussed the steps they would need to take to advise policy-makers about the issues they would need to address in making such a major policy change and the possibility that such a shift would result in a reduction of funding for Medicaid over time.

These issues are especially important to private safety-net hospitals because of the especially  large numbers of Medicaid patients they serve and the importance of Medicaid revenue to their overall financial health.

Learn more about the MACPAC discussion about Medicaid block grants in this Roll Call article.

Medicaid Block Grants 101

Amid a great deal of speculation about the possibility of Congress and the new Trump administration turning Medicaid into a block grant program, Kaiser Health News has taken a step back to ask the question “What does this even mean?”

Among the issues the new article addresses are:

  • how a Medicaid block program might work
  • how block grants differ from per capita caps
  • why block grants are so interesting and so appealing to some public officials
  • the chances of Medicaid becoming a block grant program

See the Kaiser Health News article about Medicaid block grants here.

Beware Medicaid Block Grants, Analysis Suggests

When the federal government turns housing, health, and social services programs into block grants, funding for such programs erodes over time, according to a new analysis by the Center on Budget and Policy Priorities.

The study found that

Policymakers advancing these proposals often accompany them… with assurances that the new block grant would get the same overall amount of funding as currently goes to the individual programs that it would replace.  This new analysis of several decades of budget data strongly suggests, however, that even if a new block grant’s funding in its initial year matched the prior funding for the programs merged into the block grant, the initial level likely wouldn’t be sustained.  History shows that when social programs are merged into (or created as) broad block grants, funding typically contracts — often sharply — in subsequent years and decades, with the reductions growing over time.

Of 13 such transitions from appropriation to block grant status in recent years, 11 of the programs shrunk in inflation-adjusted terms, some of them significantly so, with a median decline for the 13 of 26 percent to date.

The analysis also found that

The marked deterioration in block-grant funding over time controverts the common claim by block grant proponents that if funding levels prove inadequate, Congress will step in to provide appropriate additional funding.  The general lack of responsiveness of block-grant funding to changes in need contrasts sharply with the high degree of responsiveness of entitlement programs such as SNAP (formerly known as the Food Stamp Program). 

The study comes at a time when some policy-makers are talking about converting Medicaid into a block grant program. This proposal has been around for years and periodically resurfaces, as it has in the past year.

NAUH has long opposed turning Medicaid into a block grant program.

For a closer look at what happens when the federal government turns a program into a block grant, go here to see the Center on Budget and Policy Priorities’ report “Funding for Housing, Health, and Social Services Block Grants Has Fallen Markedly Over Time.”